Performance Reports

Performance Measures Report Card

2015 Financial Dashboard
Financial indicator 2015 Finding Change from 2014 2013 Finding
Financial position per capita
Positive Positive change Positive
Operating surplus ratio Positive Negative change Positive
Receivables as % of taxes levied Positive Negative change Positive
Net financial assets Positive Positive change Positive
Net financial asset as % of own revenues Caution Negative change Caution
Liquid assets to all reserves Positive Negative change Positive
Debt to total reserve ratio Positive Positive change Positive
Debt outstanding per $100k of Unweighted Tax assessment Positive Positive change Postive
Debt interest as a % of own source of revenues Positive Positive change Positive
Tax-based reserves and reserve funds
Operating reserves as % of own source of revenue Negative Positive change Negative
Capital reserve contributions as % of asset value Positive Negative change Positive
Capital reserve contributions to depreciation Caution Negative change Positive
Enterprise reserve and reserve funds
Operating reserves as % of own source of revenue Positive Positive change Positive
CAPITAL reserve contributions as % of asset value Positive positive change Positive
Capital reserve contributions to depreciation Positive Positive change Positive

Legend

Positive indicates to stay the course

Caution indicates we are in the right range but may be moving in the wrong direction

Negative indicates corrective action is necessary

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Financial Position per Capita

This term refers to the remaining assets in excess of all liabilities compared to net surplus on a per capita basis. Positive balances indicate the City’s margin of comfort it possesses to cover debt obligations and to have funds set aside for future sustainability. The City aims to be above the average per capita ratio as reported by the consulting firm BMA in the prior year.

Operating Surplus Ratio

This ratio provides perspective on how much of the City’s own source of revenues were left after normal operations that could be used to fund reserves, repay debt and invest in capital projects. There was a slight negative trend from 2014 which due to expenditures increase at a higher marginal percentage.

Receivables as % of taxes levied

Uncollected property taxes as a percentage of total taxes charged is a strong indication of the strength of the local economy and the ability of the community to pay their annual tax billings. The City continues to be well ahead of the average reported by BMA of 6.5% in 2015 showing the City has great economic health and strong internal controls over tax collection. There was a slight decrease in this ratio over 2014, but we need to highlight that a guaranteed interest income revenue source isn’t a bad thing when the City is well below the BMA average.

Net financial assets

This ratio is an indicator of the City’s ability to repay liabilities at a point in time and is a useful trending tool. There was a slight increase in this trend for 2015 indicating that the City created financial assets at a faster pace than it entered into liabilities. Movement of this ratio depends on the balance of financial assets compared to liabilities; cash and investment holdings play a significant role in this ratio. The reason for the increase in 2015 relates mainly to the increase in cash and investments due to lower than expected capital spending.

Net financial asset as % of own revenues

Similar to the ratio as described above, this indicator is annualized by comparing the net financial asset position to current revenue and provides an additional level of understanding useful for trending analysis and financial monitoring. In 2015, the negative trend on this ratio warns that the City’s operating expenditures are increasing at a faster pace than net assets. The City should continue to consider this when building the 2017 budget to ensure revenues continue to match expenditures and reliance on reserves to fund operating expenditures is diminished.

Liquid assets to total reserves

As reserves are a critical component of the City’s long-term sustainability, there is an expectation that the amounts that are set aside in reserves are liquid and available for use when required. This ratio compares the cash and investment balances to the reserve and reserve fund balances and a ratio of less than 1 would suggest asset levels need to be monitored closely. The City continues to meet this target in 2015 and has a balanced approached to managing the cash and investment position, while considering the City’s current liabilities as well as its reserve and reserve funds.

Debt to Total Reserve ratio

This indicator provides a measure for financial prudence by comparing total debt to the total reserve balances. Generally, the benchmark suggested for this ratio is 1:1 or in other words, debt should not exceed total reserve and reserve fund balances. At the end of 2015, the City has met this standard and there was a significant strengthening of this ratio year over year due to the delay in debt issuance and simply borrowing internally. It should be noted that planned debt issuances are not included in this calculation even though they may have been approved in the capital budget. The positive result on this ratio is a strong indicator for assessing long-term sustainability and the ability to meet the City’s debt obligations.

Debt Outstanding per $100,000 of Unweighted Tax Assessment

This ratio shows total debt compared to the value of the unweighted tax assessment base and provides a fair basis to compare the City of Guelph debt to other municipalities. The target for this ratio is set at the average municipal rate as reported by BMA in the previous year. During 2015 the City was within the range since there has been no external debt issuance since 2011. It should be noted that this indicator does not reflect the City’s ability to pay its debt obligations, but is merely a comparison to other municipalities on its debt load and does not include commitments.

Debt interest as a % of own source revenues

This ratio indicates the extent to which the City’s own source revenues are committed to debt charges and again is a useful tool when comparing to other municipalities. Debt charges continue to be less than 2% of own source of revenues and fall within a normal level compared to other municipalities.

Operating reserves as % of own source of revenue

This indicator analyzes the health of the operating reserves by focusing specifically on the stabilization and contingency reserves compared to own revenues. The benchmark changed in 2011 to be 5%-10% rather than the 8% – 10% based on a review of what other municipalities and the Government Finance Officers Association (GFOA) suggests. Additionally, the City believes that 5% is more affordable and provides sufficient funds for an emergency situation. The City splits the presentation of these ratios to show the tax-based vs. non-tax supported ratios as this provides better information for planning purposes.

Tax Supported: During 2015, there was a slight increase year over year on the tax-supported ratio although the balance is still approximately half of what is targeted. Given that it is still considerably under the target position and would not be sufficient to manage the impact of a significant emergency situation, staff has highlighted this as a ratio that needs attention and corrective action.

Non-tax supported: The non-tax supported contingency funds have met targeted levels in 2015.

Capital reserve fund contributions as % of asset value and % of depreciation

These two ratios provide insight on the level of reserve funding for future capital purposes compared to the total value of depreciable assets and to the current rate of depreciation. As a rule, the City should be at a minimum funding the capital reserves at the same amount as the annual depreciation expense and as a benchmark capital reserve contributions should approximately 2% to 3% of total asset value. These target rates will prevent sudden tax rate spikes by spreading the cost of infrastructure replacement over
many years and provides prudent contingency capital funds for significant unexpected infrastructure expenses.

Tax Supported: During 2015, the tax-supported capital contributions as a percentage of depreciation fell below the target of 1:1. Lower than expected capital spending compared to depreciation was the main reason for this decrease.

Non-tax supported:  For both ratios, the City continues to be on target and in a healthy range for annual contributions for capital infrastructure.